Japan: Solar auctions considered as METI mulls changes to renewable incentives

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A subcommittee of Japan’s Ministry of Economy, Trade and Industry (METI) met this week to discuss changes to the country’s renewable energy incentive program, mulling the introduction of an auction mechanism for solar, a regressive FIT, and other measures designed to increase the attractiveness and installation levels of clean energy in the country.

Revision of the FIT scheme began in September, and this week the Subcommittee for Reforming Systems Related to the Introduction of Renewable Energy met for the second time to address these concerns.

The committee focused its talks on four key issues: flow procedures under the current FIT program; the introduction of cost-efficient renewable energy; the resolution of grid restrictions, and R&D and regulatory reform, Izumi Kaizuka of RTS Corporation told pv magazine.

"Since the current support program for solar does not contribute significant cost reductions, an auction mechanism was discussed as one of the options," Kaizuka confirmed. "Other options discussed included a FIT based on top-runner price, a sliding-scale FIT based on introduction volume, and scheduled FIT reduction.

"In the discussion, most of the committee members supported scheduled reduction of the FIT, as well as the auction mechanism."

The auction scheme, if introduced, would see developers compete to offer the lowest price for solar development, working similarly to other auction mechanisms currently in place in fledgling and established solar markets across the globe.

Japan’s clean energy incentive program, overseen by METI, was introduced in 2012 not long after the Fukushima disaster, which served to dramatically dampen the country’s desire for nuclear power. Since that date, solar power has been one of the biggest winners, growing hugely to become the third-largest solar market in the world.

However, some utilities across the country have encountered difficulties in handling the growing level of grid connection requests from solar developers, and thus METI has held discussions on how best to tweak the incentive program to ensure fewer obstacles while maintaining demand for solar development.

"METI will revise the FIT scheme to make it more flexible," Kaizuka added. "But the change of the law requires a discussion in the national assembly in 2016, so I am certain that auctions will not be introduced immediately."

The committee will conclude a proposal by the end of December, Kaizuka confirmed.